Thanks to Jeff Hoel for providing the transcript to for the episode 84 of the Community Broadband Bits podcast with Harold Feld to talk about network neutrality and Section 706 of the ’96 Telecommunications Act. Listen to this episode here.
Harold Feld: Something got delegated to the state commissions under 706. The scope of that is not clear at the moment.
Lisa Gonzalez: Hello there. You are listening to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I’m Lisa Gonzalez.
Given the recent DC Circuit Court of Appeals ruling on network neutrality, we thought it was time to touch base again with Harold Feld, Senior Vice President of Public Knowledge. While the decision may be bad for network neutrality, one of the judges in the court hinted at a possible silver lining for community networks. Section 706 of the Telecommunications Act of 1996 addresses FCC and state authority. Circuit Judge Lawrence Silberman wrote a concurrence and dissent that addressed some of the ambiguity in Section 706. It caught our attention because it might create a better environment for municipal networks. Harold and Chris go into detail on Section 706, discussing possible scenarios and possible outcomes.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. Today, I’m back with one of our favorite guests, Harold Feld, the Senior Vice President at Public Knowledge. Welcome to the show.
Harold Feld: Thanks for having me.
Chris: We wanted to talk to you about a recent network neutrality decision, which came with a little bit of a bittersweet news. We see that the Commission does not have the full authority to do all the things that you and I would like to have it do. But we learned that 706 authority has given the FCC more power to overrule state barriers that prohibit municipal networks, perhaps. What is 706 authority?
Harold: Section 706 — 706 authority — refers to a piece of the Communications Act, the law that gives the FCC its authority, that was added as part of the last rewrite, in 1996. And this section directs both the Federal Communications Commission and state Public Utility Commissions to take steps in order to ensure that — they use a special term, but I’ll just call it broadband — is deployed in a timely fashion to all Americans, and gives them — tells them to remove any barriers to deployment and infrastructure development if they think that that’s not happening.
That’s what this provision of the law says. And it’s been around now for, well, close to twenty years, since the last rewrite. Until now, nobody had really known what that meant. The FCC did an annual report where they looked at how fast broadband was getting deployed, but they didn’t really know whether it actually gave them new authority or just told them to use the authority they had, and how this worked with the states. So, all of this came up as part of the net neutrality case, oddly enough.
Chris: And we saw, specifically, Judge Silberman, in a dissent and concurrence in part, raise the municipal network barriers as a specific barrier to infrastructure deployment. How significant is that?
Harold: Right. So, this was very important. One of the things that the FCC pointed when asked to justify its — you know, under what authority did it try to do network neutrality regulations, they pointed to this 706 language, and they said that this command gave them authority, that there were reasons to believe that if you had a not-neutral net, that that would discourage investment, discourage people from using it, what they called the “virtuous cycle” of use and investment. And what happened in the opinion was that two of the judges agreed with the FCC that the law went that far. One of the judges, Judge Silberman, dissented. He said the law gives the FCC SOME independent authority, and — but not net neutrality. Instead, he pointed to removing barriers to investment by getting rid of laws that prevent local governments from offering their own broadband service.
So that means that even the judge who was — who thought the law was MORE limited believed that, at a minimum, the law gave the FCC power to preempt these anti-muni-broadband state laws. So that’s very significant, because if the FCC then does that and has to go before a federal court, the question of does this piece of the law apply — you know, do they have authority to do at least that much — seems to be pretty settled by the whole panel, in terms of how far they ought to read this new authority that the FCC has under the statute.
Chris: And how can we reconcile that with the Nixon v. Missouri decision? In that case, the Supreme Court felt that there was not sufficient language overruling the ability of states to regulate cities.
Harold: The Nixon v. Missouri language dealt with telecommunication service, and dealt with a negative command. It said — that statute says, no state shall pass a law that prevents anyone from getting into the telecommunications business. And the FCC was asked to interpret that, as to whether that law prevented states from passing laws that prevented local governments from getting into either telecommunications or broadband. And the FCC, interpreting that language, said no, when the statute says states should not prevent “anybody” from getting into the telecommunications or broadband business, the statute didn’t mean that states couldn’t prevent themselves — and local governments are extensions of the state. So when a state passes a law saying no local government can do this, it’s limiting itself. So, Congress didn’t intend to limiting states from limiting itself. That’s what the FCC said. That’s ultimately what the Supreme Court said. And, importantly, what the Supreme Court said, in the Nixon v. Missouri case, which adopted that interpretation, said: if Congress WANTED to overrule states when they regulate themselves like this, they needed to be more specific. We’re going to assume that, you know, they didn’t touch on whether Congress could or couldn’t do that. What they said was, well, we’re going to just assume that if Congress had really meant it, that they were going to place a limit on the state to regulate its own subdivisions, then they would have said not just “anybody,” they would have said something like, and not even, you know, “anybody, including not even local governments.”
Chris: Right. And there was some legislative history to suggest that that’s what was intended, certainly. But we’ll skip past that. And we’re going to skip over one other thing, too, which is whether or not the FCC currently has the initiative and desire to overrule these state barriers with the 706 authority. And let’s just go right into assuming that the FCC does. What has to happen in order for the FCC to do that?
Harold: Here, you know, 706 — it says, go do something. And you, FCC, have the power to go do this. As opposed to, don’t — you know, states, don’t do something. So, the FCC could make a finding. It would have to say, look, we find that, first, there are places where adequate broadband is not being deployed in a timely manner to all Americans. And we see that these state laws create barriers to this deployment, and create barriers to investment in the infrastructure that is necessary for this deployment. And therefore, we, as the FCC, using our authority under this Section 706, will preempt those state laws. We will tell states that those laws are no longer operative, under this authority that Congress has granted us. That’s how that would work.
Chris: And is there — so, would there be an ask for comments? Is there sort of a multi-year kind of thing that would …
Harold: Yeah. It would have to be through a rulemaking process, where — You know, the FCC can’t just wake up one morning and say, hey, let’s issue an order that does that. They would have to build a record that supports their finding. The court laid down a roadmap of what you need to show. And it’s not that burdensome. The connection — You know, frankly, the connection between not letting local governments invest in these networks and, you know, limiting investment into networks is pretty clear. And it’s not a hard record to build. But you still have to, you know, check off all the boxes. They would have to have a proposed rule. They would have to take comment on that and build the record. Then they would issue an order. And they could do this in a couple of different ways. They could — The FCC could do this on its own. Somebody could file a petition with the FCC about a particular state law, saying please preempt this particular state law because it is bad under Section 706. Or the FCC could, you know, do this through a number of other different vehicles. They could hook it onto their Universal Service Fund reform. So there are a couple of different avenues under which it could happen. But the general process would be the same. The FCC would have to flag it, put it out for public comment, take public comment, decide they had a sufficient record that proves that these laws are bad for investment in infrastructure and are discouraging timely deployment of broadband to some portion of the population. And then they would exercise their authority to preempt those laws.
Chris: And the final issue with this whole decision seems to be state PUCs, or public utility commissions, where some of the Section 706 authority filters down to them. How do they fit in?
Harold: Well, that’s — this is one of the more intriguing aspects of the decision. Because the statute says — gives the 706 authority to the FCC AND any state commission that regulates telecommunications. Or, as we call them, the public utility commissions, or PUCs. Verizon raised, as an argument against interpreting 706 as giving authority that Congress could never have intended to share that kind of authority with the states. And the court rejected that argument. They said, no, there’s why Congress couldn’t give authority to the states. And, you know, the statutory language seems to give some authority to the states as well as to the federal government.
So, something got delegated to the state commissions under 706. The scope of that is not clear at the moment. On the one hand, you could argue very broadly that, you know, the statue doesn’t distinguish between what kind of power it gives to the FCC and what kind of power it gives to the state public utility commissions. So the state public utility commissions have the same kind of power that the FCC does, because it’s a grant of federal authority. So then, what about those states where the state has passed a law saying no muni broadband? Could the state public utility commission use THEIR Section 706 authority to override that?
Well, that’s a very interesting question. On the one hand, Congress explicitly delegated to the state public utility commission. So the language from the Nixon v. Missouri, and the previous decisions, that states can limit themselves, you can argue that, well, Congress WAS specific. They said they wanted to bypass state legislatures, because they were worried state legislature would be all protectionist, and wouldn’t, you know, support — they’d be beholden to powerful companies. So Congress bypassed them and went right to the state public utility commissions.
You can also argue that, well, we have this thing in the United States called the 10th amendment, that — you know, the federal — the states are, you know, fifty laboratories of democracy. They — the federal government has limited powers when it gets to kind of a core state regulation idea. And you can argue that, well, you know, that what Congress said was, yeah, you, state utility commissions, can use any powers that you have under your state authority to do all of the 706 stuff, but that it was not separate federal authority to the state public utility commissioners to override the state, when the state has explicitly taken authority away from the public utility commissions.
So, it’s very confusing. But I there’s a good argument here to say, look, this is a federal law. This is a federal law that, unlike the previous one that was described, you know, that said states are not allowed to get into — to prevent anybody from getting into this business, there is a federal law that is specific about who the actor is, and what they are supposed to do. So I think there’s a very good case for a public utility commission to be able to say, well, you know, Congress actually delegated an explicit authority to us — and we should exercise it.
Chris: Thank you for that explanation. We’re really hoping that we see some of these barriers struck down, whether it’s by the states themselves, in the public utility commissions, or by the FCC. So it’s really helpful that you provide the insight of how it all works.
Harold: You know, if nothing else, I would say that state public utility commissions — under this Section 706 authority — even if they can’t preempt their states certainly have the power to do their own annual reports, to show what the problems are in the state, and create political movement behind getting these laws repealed.
Chris: Oh, that’s very interesting. Yes. You can certainly have a moral authority, or a specialist — a technical specialist on this — weighing in on how these laws are slowing down the deployment of the infrastructure. Thanks for coming on the show.
Harold: As always, a pleasure.
Lisa: You can, of course, read more about the DC Circuit Court of Appeals decision at publicknowledge.org and at Harold’s blog, Tales of the Sausage Factory, available at webmachine.com . If you follow the FCC tag at muninetworks.org , you can also read more of our stories on the decision. And, specifically, more about Section 706.
We want you to e-mail us with questions about your ideas for the show. Write to email@example.com . Follow us on Twitter. We are @communitynets. This show was released on February 4th, 2014. Thank you to the group, Fit and the Conniptions for their song, “Bless Your Heart,” licensed using Creative Commons. And thank you for listening.
This article is apart of MuniNetworks. The original piece can be found here